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Selvita confirms its intention to conduct a secondary public offering on the regulated market of the Warsaw Stock Exchange

Krakow, Poland – 22 January 2018 – Selvita S.A. (WSE:SLV), one of the biggest innovative biotechnology companies in Europe, has confirmed its intention to conduct a secondary public offering (the “Offering”). The company is planning to offer up to 2.2 million newly issued shares and expects to raise PLN 140 mn net. Funds raised will be used towards the execution of Selvita’s development strategy for the years 2017-2021, which main goal is to generate growth of the Company’s value through self-financing of the early stages of discovery and development of its innovative R&D projects, as well as their commercialization at more advanced stages of development than it’s been done up to date.

According to the development strategy presented in August 2017, by the year 2021, Selvita is planning to achieve the following business goals:

Phase I development of SEL120, and signature of a partnering contract in Phase II of clinical trials, assuming much better agreement conditions than it was presented in case of SEL24 agreement;

Partnering of one research project per year in 2018-2020, including: in 2018 project in the field of targeted therapies in an early discovery or preclinical phase; in 2019 project in the field of cancer cell metabolism and immunometabolism in a preclinical or clinical phase; in 2020 project in the field of immune-oncology in a clinical phase;

Further dynamic increase in revenues from the Services Segment;

Increase in Company’s capitalisation to over PLN 2 bn (i.e. by at least 180% above the average valuation in the past three months).

According to the strategy, Company predicts that the total financial expenses associated with the investment plans for 2017-2021 will amount to ca. PLN 390 mn, out of which Selvita plans to raise PLN 140 mn from investors, with the balance coming from grants and own funds.

The capital requirements are associated only with the development of projects from the Innovation Segment and oncology projects developed within it – expenses planned on R&D activities in 2017-2021 will amount to ca. PLN 290 mn, which means that funds obtained from investors will represent around half of this amount. The balance will be financed with supplementary sources of financing, i.e. EU, domestic and non-EU subsidies, cash from operating activities and those from partnering agreements.

Primarily, two drug development projects will be conducted: SEL24 (clinical development in collaboration with Menarini Group – no capital requirements) and SEL120 (independent execution of Phase I/IIa of clinical trials and further product commercialisation). Simultaneously, drug discovery research will be conducted within three existing research platforms: Targeted Therapies, Cancer Cell Metabolism and Immunometabolism, as well as Immuno-oncology Platform. On top of that, the Company is planning to expand its research and development portfolio with projects based on biological substances through creation of a new, integrated drug development platform.

– The development strategy which we want to continue executing, focuses on the innovative segment which generates the greatest value added and potential for Company’s growth. Considering broader therapeutic and market potential of SEL120, and the fact that in this case we are planning to sign a partnering contract after an initial assessment of its therapeutic potential in Phase IIa clinical studies, we expect that the terms of a potential agreement will be better than it was in the case of SEL24. Meanwhile, we will be generating an increase in the Company’s value through smaller contracts in the Innovation Segment – says Paweł Przewięźlikowski, co-founder, the largest shareholder and Chief Executive Officer at Selvita.

The remaining investment capex, related to the construction of the Innovative Drugs Development Centre (a complex set of laboratories dedicated to the discovery and development of innovative drugs) as well as development of the Company’s services and bioinformatics segments, will be financed exclusively from subsidies and own resources, not utilizing the funds from the planned stock issue.

About the Offering

The Offering is planned for Q1 2018, with the final decision concerning the date subject to the market situation. The planned Offering will consist of up to 2.2 million new series H shares. The company is expecting to raise PLN 140 mn net, which will be dedicated entirely to the development of innovative projects with a strong commercialization potential.

The new stock issue will be made without pre-emptive rights. However, according to a decision of the General Meeting of Shareholders, new shares will be allocated first to investors who express their wish to participate in the Offering at terms offered, and present relevant documents confirming that they were shareholders of Selvita on a selected date, which will be set once the prospectus is approved by the Polish Financial Supervision Authority. These investors will have the right to take up new shares at an amount sufficient to allow them to retain their stake in the company. The remaining shares will be allocated at terms set in the prospectus.

Selvita will be seeking permission for admission and introduction of its shares into public trading on the regulated market of the Warsaw Stock Exchange. The offering and the settlement will be made in Polish zloty, through the Central Securities Depository of Poland.

Details about the Offering will be made available in the prospectus once it is approved by the Polish Financial Supervision Authority and published.

Vestor Dom Maklerski and Bank Zachodni WBK are the joint book-runners for the SPO.

Law firm Chabasiewicz, Kowalska i Partnerzy Radcowie Prawni serves as the legal advisor for this project.

About the Company

Selvita is a drug discovery company, developing breakthrough therapies in the area of oncology. The company was established in 2007 and currently employs over 440 scientists, among which 30% are PhDs. Selvita is headquartered in Krakow with second research site in Poznan, Poland and international offices located in Cambridge, MA and San Francisco Bay Area, in the US, as well as in Cambridge, UK.

Company operates in three segments:

Innovative – research and development activities focused on proprietary, innovative drugs. The company’s most advanced program, SEL24, has been licensed to Menarini Group and is currently in Phase I studies in AML. In 2017, the Menarini Group has purchased the rights to further development and commercialization of SEL24 (up-front payment of PLN 20.3 mn, total maximum value of the agreement sums up to PLN 379.1 mn).
The second most advanced project is SEL120, a first-in-class small molecule inhibitor of CDK8 in preclinical studies, which is currently being developed in cooperation with the Leukemia and Lymphoma Society („LLS”), the largest voluntary health agency dedicated to the fight against blood cancer. The strategic cooperation with LLS includes further pre-clinical research and phase I trial of SEL120 compound in the area of acute myeloid leukemia (AML) as well as other indications in the area of hematological cancers. Under the terms of the agreement, LLS will provide up to USD 3.25 mn funding over 4 years, through its Therapy Acceleration Program® (TAP), in order to help fund further SEL120 IND-enabling studies and a Phase I trial in AML. This amount represents half of the planned budget for the development of SEL120 program until the end of Phase I trial.
At the same time, Selvita conduscts drug discovery research within three existing research platforms: Targeted Therapies, Cancer Cell Metabolism and Immunometabolism, as well as Immuno-oncology Platform. The Company is also planning to expand its research and development portfolio with projects based on biological substances through creation of a new, integrated drug development platform. Historically, Selvita has signed a total of seven partnering agreements, with companies such as Merck, H3 Biomedicine or Nodthera.

Services – drug discovery and development services conducted on behalf of external clients, particularly those from pharma, biotech and chemical industry. Selvita’s clients include small, mid­sized and large companies as well as global corporations.

Bioinformatics (Ardigen) – combining bio-data science and complementary advanced software services to support data-driven life science and healthcare organizations, as well as for the development of precision and personalized medicine products. The company offers services to renowned clients from Europe and the US, such as the Harvard Medical School and global pharma companies.

Selected financial data

The Company has been profitable every year since 2014. Exports, primarily to EU countries and to the US, account for almost 90% of its sales (data for 2016).

As of December 31, 2017, the value of commercial backlog for 2017, based on signed commercial contracts and grant agreements, totals PLN 104.6 mn and includes:

Services – PLN 44.0 mn

Innovations – PLN 36.6 mn

Ardigen S.A. (bioinformatics) – PLN 7.0 mn

Grants – PLN 17.0 mn

Selvita debuted on the NewConnect market in 2011. Since 2014 the Company is listed on the main market of the Warsaw Stock Exchange and in March 2017 it has joined the sWIG80 index. For more information please visit: https://selvita.com

The following document does not represent a public offering as defined by the Law On Public Offering and Terms for the Introduction of Financial Instruments into Organized Trading System and on Publicly Listed Companies (“Law On Public Offering”) dated July 29, 2005, or any other offer or invitation to purchase Company’s securities of any kind, or an invitation to make offers to purchase of subscribe for the Company’s securities. The following document does not constitute information about the Company’s securities, and the terms of purchase or taking up of such securities, which would be sufficient grounds for the decision to purchase or take up such securities. The document serves exclusively promotional purposes. The sole legally binding document containing information about the Company and its Securities will be the issuing prospectus approved by the Financial Supervision Authority, which will be published by the Company on its website at www.selvita.pl.Forward-looking representations contained in this document, including in particular those relating to Company’s development or revenues, have been determined on the basis of a number of assumptions, expectations and projections and are consequently exposed to the risk of uncertainty and may be amended due to the impact of external and internal factors and may not be treated as binding projections. The Company or persons acting on its behalf and in particular members of the Company’s Managing Board, its advisors or any other persons, give no assurances that these forward-looking expectations will be met, in particular they do not guarantee that the future results or events will be compatible with these representations, or that the future results of the Company will not be materially different from those expected. Information found in this document may be subject to material changes. The Company, or any other person, are not required to update such information.The following document may not be disseminated, published or distributed, directly or indirectly, in its entirety or in parts thereof, on the territory of the United States of America, Australia, Canada or Japan.